How Long Can Republicans Keep Up Mythical Economics?

By Ben Cohen: For 30 years, Republicans have espoused an economic theory that has wreaked havoc on America's poor, funneled wealth upwards at an unprecedented rate and brought the economy to the brink of destruction. Their simple mantra that tax cuts for the rich and deregulation solve all of humanity's problems is chanted religiously and has pervaded our culture to the point where opposing it has been seen as treason.

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The corporate media has perpetuated this myth filling airtime with business and news shows and built on the assumption that neoliberalism is a fact and anything else doesn't work. The result has been a debate so stifled that it took a monumental economic crisis to even consider there might be an alternative to the current monetary system.

Responding to public outrage, Democrats have begun to publicly question the dominant ideology, shifting debate back a little to the center. It hasn't been inspiring, but they have at least created room to maneuver when it comes to crafting policy.

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The Republican Party has been unable to accept any new view points because of one simple reason: It cannot afford to - at least up until now.

If a candidate on a national or state level wanted to run on a higher taxes and/or more regulation platform, the corporate interests that bankroll the party would simply throw all their money at the Democratic candidate. As it stands, they do that anyway, but continue to fund the Republican Party in the hope of more concessions should they get into power.

The problem is structural due to the disastrous effect of money in politics - with no campaign finance reform, donations from corporate America will continue to critically influence policy regardless of the outcome.

But there comes a point when the economic ideology becomes so dangerous that it stops being in anyone's interest, including the corporations. It is now clear that that time has come, and corporate America can no longer support a system that no longer functions for their benefit. As Noam Chomsky writes:

The spectacle is even coming to frighten the sponsors of the charade. Corporate power is now concerned that the extremists they helped put in office may in fact bring down the edifice on which their own wealth and privilege relies, the powerful nanny state that caters to their interests.

The basic truth is as follows: Corporations need markets to sell their goods in, and if no one has jobs or money, there aren't any markets to sell in. While they pretend to believe that tax cuts work in everyone's interest, they know that results in reality show something completely different.

A remarkable survey last year showed that 68% of millionaires supported raising their own taxes - a clear sign that the owners of the country's wealth are worried that their own survival is at stake if wealth isn't distributed more evenly. But still, the Republicans refuse to acknowledge that anything needs to change.

Paul Ryan, the GOP's economic 'Wunder kid' crafted a budget proposal passed by Republicans in the House of Representatives last week that Krugman labeled "The most fraudulent budget in American history". He continued:

The trouble with the budget devised by Paul Ryan, the chairman of the House Budget Committee, isn’t just its almost inconceivably cruel priorities, the way it slashes taxes for corporations and the rich while drastically cutting food and medical aid to the needy. Even aside from all that, the Ryan budget purports to reduce the deficit — but the alleged deficit reduction depends on the completely unsupported assertion that trillions of dollars in revenue can be found by closing tax loopholes.

And we’re talking about a lot of loophole-closing. As Howard Gleckman of the nonpartisan Tax Policy Center points out, to make his numbers work Mr. Ryan would, by 2022, have to close enough loopholes to yield an extra $700 billion in revenue every year. That’s a lot of money, even in an economy as big as ours. So which specific loopholes has Mr. Ryan, who issued a 98-page manifesto on behalf of his budget, said he would close?

None. Not one. He has, however, categorically ruled out any move to close the major loophole that benefits the rich, namely the ultra-low tax rates on income from capital.

The math indicates that the budget would be a complete and utter disaster given they are based on nonsense. No sane party would put its name to something as ridiculous, but the GOP, including Presidential front runner Mitt Romney, has signed off on it with no qualms whatsoever.

It will be interesting to see how corporate donors line up during the general election. We could conceivably see corporate America and the rich line up behind Barack Obama and completely shun the GOP nominee - not because they want more taxes and regulation, but because they know they need it.